ARC & CO. STRENGTHENS TEAM WITH SENIOR PROMOTIONS

Specialist debt advisor Arc & Co. has moved to strengthen its team with four senior promotions.

Tom Berry, Cameron Hayes and Philip Kay have all been promoted to director, while Gareth Briggs becomes head of UK residential mortgages.

The promotions follow the recent unveiling of a new corporate structure at Arc & Co., including James Fleming moving to the newly-created position of executive chairman and the creation of partners for the first time. The new partnership structure has been designed to further brokers’ career development and enhance their involvement in the firm’s wider activities, positioning Arc & Co. for continued expansion.

Andrew Robinson, CEO of Arc & Co., said: “These promotions are just reward for excellent performance, and reflect the new structure we have put in place to ensure clients continue to receive the very best advice. Tom, Cameron, Philip and Gareth are all key members of our wider team, and it is fantastic to reward their efforts with these promotions and set them on the path to the newly-created partnership positions. Alongside James Fleming taking up the new role of executive chairman, this strengthens our senior team to position Arc & Co. for future growth.”

The Arc & Co. Group is a specialist asset finance advisory company based in Fitzrovia, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO. COMPLETES ON £85 MILLION OF DEALS IN JULY AND AUGUST

Arc & Co. has completed on £85 million of new loans during the past two months, with 24 separate loans arranged with 16 different lenders.

The deals were across a full range of sectors and geographies, including residential mortgages in the UK and Europe, commercial asset refinances, residential development loans and buy-to-let portfolio facilities. Advice was provided by Arc & Co. on a wide spectrum of structures, such as senior debt, mezzanine debt and equity.

Andrew Robinson, chief executive officer of Arc & Co., said: “Summer is traditionally a quiet period for the real estate finance market, but the performance of our team during July and August highlights the ongoing appetite in the marketplace.

“£85 million of transactions – an average lot size of £3.5 million – demonstrates the resilience of the Arc & Co. team in going above and beyond to source finance and finalise deals in a turbulent market. It is also worth nothing the breadth of sectors, structures and geographies that we have worked across during this time. It is a source of great pride that we were able to deliver such strong results over the past two months.

“As we move into Autumn, there is clearly a great deal of demand for finance – and pool of lenders willing and able to provide it – as investors and owners grapple with issues ranging from EPC upgrades and rising development costs to increased interest rate pressures and cover ratio difficulties. We stand ready to help all our clients address the challenges they face, with our trademark innovative approach and commercial focus continuing to deliver results.”

ARC & CO LAUNCHES NEW CORPORATE STRUCTURE WITH APPOINTMENT OF JAMES FLEMING AS EXECUTIVE CHAIRMAN

Specialist debt advisor Arc & Co. has unveiled a new corporate structure to support its continued expansion, with James Fleming moving into the newly-created role of executive chairman.

James has been chairman of Arc & Co. since September 2021, during which time the firm has expanded into new sectors and attracted new talent. As executive chairman, James will have greater involvement in day-to-day activity, enabling him to provide greater support to the wider team and drive further expansion of the group’s services and business partnerships.

James was formerly head of international banking at Coutts & Co., chief executive of Arbuthnot Latham and chief executive of multi-family investment office Sandaire. His experience in running large banking teams, alongside designing and implementing company structures while ensuring the provision of highest-quality advice, remains a key part of Arc & Co.’s expansion strategy.

The new corporate arrangements include the creation of a partnership structure for the first time, designed to broaden brokers’ career development opportunities and enabling greater involvement in the wider group activities. Alongside a simplified team management, the partnership will position Arc & Co. for continued growth.

Andrew Robinson, CEO of Arc & Co., said: “As Arc & Co. grows, it is essential to adapt to better reflect the aims of the business, to attract and develop talent, and continue to provide clients with the very best advice. These new arrangements, with the creation of an executive chairman role and new partnership structure level, puts Arc & Co. in the ideal position to expand its areas of expertise while deepening the brokers’ involvement into other aspects of the firm’s services.

“During James’ chairmanship of Arc & Co., the firm has made great strides in expanding its reach into new sectors and continuing to deliver the very best in debt and equity advice to clients. This new role will enable James to provide even greater day-to-day influence and support, developing our services and business partnerships, as we look to further evolve and remain at the forefront of the market.”

James Fleming, executive chairman of Arc & Co., said: “I am as excited about the future of Arc & Co. as I was when I first joined the team and its inherent strengths, including its reputation for delivering the very best in advisory services, make it uniquely well-positioned for further growth. Becoming executive chairman will enable me to continue to help guide the firm’s strategic direction, facilitate new services and partnerships and assist its ongoing expansion.”

The Arc & Co. Group is a specialist asset finance advisory company based in Fitzrovia, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO ARRANGES £10.4 MILLION LONDON INDUSTRIAL DEVELOPMENT LOAN

Specialist debt advisor Arc & Co. has arranged a new £10.4 million loan from Ortus Secured Finance to facilitate the acquisition of a prominent light industrial scheme in London.

When complete, the development will provide 29,000 sq ft of industrial space across a 2.3-acre site with work expected to finish in the second half of 2024. The borrower is planning to lease and hold the completed asset while it advances a significant residential-led scheme in the area, which is part of a broader masterplan.

“We are delighted to have worked with Arc & Co to provide the financing for the client,” said Jon Salisbury, Managing Director at Ortus Secured Finance. “The successful financing of this deal is a testament to our team’s ability to navigate complex financing structures and working with Arc & Co, with their impressive track record in introducing high-quality clients, always makes the deal more straightforward. This project is a significant development for the area, and we are confident it will boost the local economy. We are proud to be supporting this project and helping make it to fruition.” 

Ed Horn-Smith, managing director at Arc & Co. said: “Both the borrower and Ortus have considerable experience in this sector, and as such it has been a great experience to work with them on this facility. We look forward to seeing this exciting project progress.”

The Arc & Co. Group is a specialist asset finance advisory company based in Fitzrovia, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

Ortus Secured Finance is a property finance company based in central London, with offices around the UK. It lends from £100,000 to £25million for terms of up to three years, secured over a wide range of residential and commercial property. Ortus Secured Finance has a strong track record of providing financing for complex development projects, and it is committed to helping businesses achieve their growth goals. 

ARC & CO ARRANGES £16 MILLION DEVELOPMENT FINANCE LOAN FOR BATTERSEA INDUSTRIAL SCHEME

Specialist debt advisor Arc & Co. has arranged a new £16 million facility from Ingenious Real Estate to finance the development of a light industrial scheme in Battersea, south-west London.

The finance has been arranged on behalf of a private developer client at a loan-to-gross-development-value (LTGDV) of 65%.

The developer is constructing 30,000 sq ft of high quality general industrial and last-mile distribution space, following planning permission being secured in May. Work on the scheme is expected to complete in Autumn 2024, at which point the developer will look to lease and hold through refinancing onto a longer-term facility.

The new loan is the second arranged between the two parties. Arc & Co. arranged bridging finance from Ingenious Real Estate to acquire the site in summer 2022, enabling the borrower to benefit from short-term income during the planning process. The bridge was arranged at 70% loan-to-value, with the roll onto development finance at 65% LTGDV releasing equity for further acquisitions.

Cameron Hayes, asset finance advisor at Arc & Co., said: “Ingenious Real Estate is one of the leading specialist funds for speculative commercial developments and was extremely flexible to work with throughout the arrangement of these loans. We look forward to seeing the project built out and working with our client on the refinancing once work has been completed.”

Harry Cloke, Investment Director at Ingenious Real Estate, added: “This is a highly experienced developer and another top introduction from Arc & Co. We are delighted to be continuing the project into the development phase and adding to our ever-growing industrial strategy alongside our more established residential, mixed-use and bridging offering.”

The Arc & Co. Group is a specialist asset finance advisory company based in Fitzrovia, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO ARRANGES £2.3M DEVELOPMENT LOAN FOR BUCKINGHAMSHIRE HOMES

Specialist debt advisor Arc & Co. has arranged a new £2.34 million development finance package with West One and LDS Sales Guarantees to fund the construction of five luxury homes in Buckinghamshire.

The facility has been provided to a private client of Arc & Co. at an LTV of 70%. West One is the senior lender, with LDS providing a sales guarantee with a 10% cash deposit release to reduce the developers day one equity contribution. The facility was arranged within four weeks of initial enquiry, enabling the client to secure the site in record time.

Oliver Holden, senior broker at Arc & Co., said: “The structure of this facility and the timelines involved made this a complex deal to finalise, but both West One and LDS were excellent to deal with, going above and beyond to complete the package within four weeks of initial enquiry. The borrower is a repeat client of Arc & Co, and we look forward to seeing the completed homes and working with them on future projects.”

Chris Fortune, Relationship Director at LDS, said: “This is our third deal in quick succession with West One as our Sales Guarantee: senior debt combination gains traction across the market. Arc & Co oiled the wheels expertly to enable a quick completion and we look forward to working with Ollie and team again soon.”

Dan Alfano, Senior Portfolio Manager at West One, said: “This was an extremely time sensitive transaction which wouldn’t have been possible without the expert assistance of Arc & Co. We are very pleased to continue building on an established relationship with Arc & Co and LDS and look forward to completing more deals in the future.”

The Arc & Co. Group is a specialist asset finance advisory company based in Fitzrovia, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO ARRANGES £22 MILLION OAKNORTH BANK LOAN FOR EDINBURGH AIRPORT HAMPTON BY HILTON

Specialist debt advisor Arc & Co. has arranged a new £22 million facility from the neobank for entrepreneurs, by entrepreneurs, OakNorth Bank, secured against the Hampton by Hilton hotel at Edinburgh Airport.

The senior commercial loan has been provided on an interest-only basis.

Due to the hotel’s strong trading performance, the borrower (Ability Hotels) intends on extending the existing 240-bedroom property over a three-phased development adding an additional 380 keys in total. If planning consent is secured, OakNorth Bank will provide the development facility for the works.

Located opposite the main terminal building at Edinburgh Airport, the Hampton by Hilton was constructed in 2018 and provides 240 bedrooms.

Ed Horn-Smith, managing director at Arc & Co., said: “The nature of this arrangement – not only of the initial facility, but also the provision of a subsequent development loan should planning permission be secured – puts a high premium on trust between all parties. Having secured loans from OakNorth Bank in similar situations in the past, we knew they were the ideal funding partners for such a facility, and as such it is hugely pleasing to have reached a solution that works for everyone. We look forward to working with both the client and OakNorth Bank on future projects.”

Damien Hughes, Senior Director of Property Finance at OakNorth Bank, added: “Edinburgh Airport is Scotland's busiest airport and the sixth busiest in the UK, that saw over 11.2 million people travel through it in 2022, up from 3 million in 2021. The Ability Group has built up an excellent reputation for delivering high-quality hotels in areas of high demand, with its Hampton by Hilton site at Edinburgh Airport being the perfect example of this. We were delighted to work with both The Ability Group and Arc & Co. on this transaction and look forward to working with both companies again in the future.”

The Arc & Co. Group is a specialist asset finance advisory company based in Fitzrovia, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO AND LONDON BELGRAVIA GROUP LAUNCH STRATEGIC PARTNERSHIP

Arc & Co. and London Belgravia Group have launched a new strategic partnership to offer clients an integrated advisory service across real estate insurance and finance.

The new strategic partnership will provide independent and impartial advice on real estate finance, equity, structural warranties, performance bonds and general insurance requirements across UK residential and commercial property.

To drive collaboration and further enhance client servicing, the companies will jointly occupy office space at 60-62 Margaret Street, W1W 8TF taking over 5,000 sq ft at the address between them. The shared space will provide a hub where clients can visit to secure comprehensive, best-in-class advice for all of their real estate finance and insurance requirements.

Having worked closely together for some time, the strategic partnership represents a deepening of the relationship between the two firms. By bringing together specialists from across real estate finance and insurance, the new partnership will be able to provide a comprehensive and integrated service, enabling developers to mitigate risk and maintain margins in an increasingly competitive market.

Arc & Co. is a specialist real estate finance advisor – structuring senior debt and equity packages across development, commercial and bridging facilities – while London Belgravia Group provides bespoke insurance and risk management solutions to developers, investors and HNWIs. Combined, the two firms last year advised more than 2,000 clients with development costs in excess of £4 billion.

 Andrew Robinson, CEO of Arc & Co., said: "We are always looking for best in class service providers to ensure our clients’ projects deliver on time and maximise profitability. These types of partnerships allow us to team up with the best in the industry and make use of their extensive experience. We have been working with London Belgravia Group for three years now and have always been impressed by their knowledge and professionalism."

Giles Fallan, CEO of London Belgravia Group, added: “The partnership with Arc & Co. will offer our clients impartial and connected advice in what has become a crowded and potentially overbearing market. With new entrants in both the latent defect and development finance markets, the importance of seeking third party advice is essential. Working with Arc & Co. we have assisted many clients to achieve the strongest and most cost-effective finance and insurance available.”

ARC & CO ARRANGES £16m LOAN WITH TAB

Specialist debt advisor Arc & Co. has arranged a £16 million 1st charge six-month bridging loan with specialist lender TAB. The loan was arranged on behalf of a private client.

The 70% LTV facility is being used to refinance 60 apartments across two buildings in Leeds — one block of student accommodation and a second residential block.

The borrower was facing tight deadlines as its existing lenders' terms were ending. TAB was able to step in to refinance two separate lenders simultaneously on the same day. The loan will facilitate a leasing period ahead of refinancing onto a long-term debt arrangement.

Edward Horn-Smith, managing director at Arc & Co., said: “This was a difficult and complex deal. With mainstream lenders out of the equation, we knew that this called for the expertise of a specialist finance provider. When we search for a finance facility, we look for a deal that works for all the parties, and a lender partner with whom we can collaborate. We found that with TAB. The team impressed us not only with their speed and professionalism but also their tech and their commitment to transparency. TAB went the extra mile to help us structure the debt on behalf of our client, even in these challenging circumstances and we look forward to working with them again in the future.”

Nick Russell, TAB’s sales director, added: “While the ultimate borrower is a seasoned property investor with a strong history of property investments and an extensive property portfolio, this was a complex deal calling for an innovative and proactive approach. Technically, this facility consists of four loans, totalling £16million, across multiple assets for one borrower — it’s a credit to Emmanuel Johnson and the team that we got it over the line so swiftly.”

TAB underwriter Emmanuel Johnson said: “This was the first time I had worked with Ed Horn-Smith on a deal. He was professional and extremely knowledgeable. The client was responsive and quick to provide any information requested. It was a fantastic experience working with Arc & Co and the client to get this completed.”

ARC & CO ARRANGES EUROPEAN FINANCING DEAL

Specialist debt advisor Arc & Co. has arranged a new €8.6m million bridging loan from Interbridge to finance a prime development opportunity in Val d’Isere, France. The loan was arranged on behalf of a Singapore-based HNWI via a Luxembourg Holding Company with French SCI.

The facility – taken out at 60% LTV over a 12-month term – releases equity from two existing chalet properties to fund the acquisition of a parcel of adjoining land, to be marketed for subsequent redevelopment.

Andrew Robinson, CEO of Arc & Co., said: “This was a complex deal with a unique set of circumstances, which called for an innovative and proactive approach. With mainstream local lenders out of the equation, we knew that this called for the expertise of a specialist lender. The team at Interbridge took the time to understand the mechanics of the deal, demonstrated their belief in the exit plan and swiftly executed the deal despite the challenges presented by cross-border transactions”.

Sven Peter, CEO of Interbridge said: The loan use case presented to us by Arc & Co in one of Europe’s premium winter resorts got our attention from the outset. Our know-how in cross jurisdictional lending allowed us to make a quick assessment of the situation and execute this amazing transaction fairly swiftly. Both the borrower and Arc & Co, were exceptionally professional and together the parties delivered a great result”.

The Arc & Co. Group is a specialist asset finance advisory company based in St James’s, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO ARRANGES £5m BRIDGING FACILITY

Specialist debt advisor Arc & Co. has arranged a new £5m million bridging loan from West One to refinance a development opportunity in Tunbridge Wells. The scheme comprises of several residential properties and a vacant grade 2 listed building with potential for development into an assisted living unit.

The facility – taken out for a one-year term - refinances an existing bridge loan and will enable the borrower to market the residential units and the development opportunity after gathering planning.

Tom Berry, asset finance advisor at Arc & Co., said: “As ever, we are pleased to be able to support developers in bringing forward quality opportunities. This new facility – arranged with the ever responsive team at West One – will provide vital short-term working capital and a smooth exit for our client.”

Michael Grant, head of sales – bridging and development finance at West One, added: Working with Tom is very easy, you know what you are getting, key salient points to ensure a smooth process from start to finish, always responsive and pragmatic in his approach to ensure myself and Greg (Senior Underwriter) new exactly where we stood throughout the transaction. Most importantly the customer being front and centre all the way to a successful completion. We look forward to further business from Tom and the wider team at Arc & Co.

The Arc & Co. Group is a specialist asset finance advisory company based in St James’s, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO STRENGTHENS TEAM WITH NEW ASSET FINANCE ADVISOR

Specialist debt advisory Arc & Co. has further strengthened its market-leading capabilities with the recruitment of Dieter Kerschbaumer as an asset finance advisor.

Dieter joins as a chartered quantity surveyor, with more than five years’ experience working on development projects from inception to completion. In his new role, he will be focused on developing strong relationships with lenders to structure the most effective development, commercial and bridging finance solutions for clients.

Based in St James’s, London, The Arc & Co. Group is a specialist asset finance advisory company. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, mortgages and leasing.

Arc & Co. CEO Andrew Robinson said: “Successful finance advisory is dependent on genuine understanding of the real estate sector, and as such we are always keen to welcome people such as Dieter with ‘on the ground’ expertise. His arrival further strengthens our market-leading team at an exciting time for Arc & Co., and we look forward to mentoring him as his financial expertise grows.”

Dieter Kerschbaumer added: “Arc & Co. is renowned for its in-depth market knowledge, tailored approach and award-winning debt advisory services, and as such it is exciting to be joining the team. Having qualified as a quantity surveyor and played an active part in development schemes, I know just how fundamental the right finance solution is, and I look forward to using this insight to help clients meet their requirements.”

SUSTAINABILITY UPGRADES: WHO IS GOING TO PAY?

A little thought experiment for you: if you had to completely upgrade your home’s energy performance – and face steep fines if you didn’t – would you be confident of finding the cash?

And what if you couldn’t? Re-mortgaging is an option, but only if there was enough equity in the property to borrow more. Maybe a wealthy friend could provide the capital, in return for part ownership of your home of course. But what is the outlay was more than the value of the asset?

A classic Catch-22. It doesn’t make economic sense to spend on the upgrade, but selling the asset would mean a huge discount to current values. You either sell at a big loss or hold an asset that actively costs you money through fines. Hobson’s Choice.

To bring our thought experiment into the real world, this is the situation many commercial investors are currently grappling with, and solutions are in short supply. MEES regulations mean that by 2030 all non-domestic properties must have an EPC rating of ‘B’ or higher; by some estimates, as much as 88% of assets will need some form of upgrade to become compliant. For properties that aren’t upgraded, but continue to be leased to occupiers, fines start at 10% of the property’s rateable value, rising to 20% after three months with an upper limit of £150,000. The urgent need to upgrade is clear, but poses a rather large question: who exactly is going to pay for all this?

Flight to quality

The answer is not a simple one, and in truth it varies hugely depending on each asset’s specific circumstances. But when weighing up a building’s prospects there is a clear distinction to be made between high-quality holdings and those that are at the lower end of the spectrum.

Let’s start at the top end of the market, if only because it’s a little easier to foresee what will happen. In broad terms the best assets – in strong locations with high occupier demand, and usually owned by well-capitalised funds and institutions – will face very few hurdles. Not only will upgrade costs be generally lower as a proportion of overall value, but such works could potentially even have a net positive effect on values. With corporate occupiers willing to pay a premium for sustainable space, and MEES regulations likely to trim supply at the margins, we can expect a fillip to top-end rents and values.

Given these dynamics, finding the cash to upgrade these assets will be relatively straightforward. In many cases the investor will have the money available to fund the necessary works. If needed, loans in this space will be easy to come by – we’re already seeing both banks and alternative lenders expand their offer, with products operating in a similar way to development finance facilities.

At the margins, there will be some assets – on the fringe of the best locations, older and therefore more expensive to bring up to scratch – that require a different solution, and private equity will step in for some of the heavy lifting. A number of major PE funds are manoeuvring to capitalise on this need, with teams identifying the investors that are short of cash but have assets where upgrades make sense. Globally, private equity has $500 billion of ‘dry powder’ in its warchest – expect to see a decent slice of that deployed in upgrading buildings in return for stakes in the assets.

The sums don’t work

Towards the lower tiers of asset quality, the picture is a far more complicated one. Even before availability of cash is taken into account, it is much harder to make the sums add up. These buildings will often be older – needing more spent on them to bring them up to scratch – while at the same time will be worth less than equivalent higher-quality assets. In parallel, these buildings are less likely to see the uplift in rents and values that prime stock will experience; the best many could hope for is for current values to be maintained. The ratio of required spend to asset value is squeezed from both directions, and in many cases it will simply not make sense to undertake the upgrades.

Then there is the question of available capital to complete the works. Owners of lower-grade assets are often far smaller and with a great deal less cash on hand. Many will be owned by individuals and families whose wealth is tied up in other assets, including their own homes. Unlike the institutions, laying hands on the necessary cash to fund the works will be at best tricky and in many situations impossible.

The dynamics effectively rule out borrowing – lenders will have neither the capacity nor appetite to engage with this end of the market – and the doors to private equity funds will be similarly closed. There is, in short, a lot of work that needs to be done, and not enough cash to go around.

The luckier owners will be able to redevelop sites for alternative uses, or sell them to people that can. Others will be stuck with essentially worthless assets. The Government may review the regulations timetable, but this will surely amount to a stay of execution rather than a resolution. One thing is clear: some difficult decisions lie ahead.

This piece was initially published in the May 2023 edition of Business Moneyfacts Magazine.

ARC & CO ARRANGES £14m QIB RESIDENTIAL INVESTMENT FACILITY

Arc & Co. has arranged a new £14 million facility with Qatar Islamic Bank (QIB) for the investment acquisition of 90 residential units in London.

With the properties recently completed the interest-only facility, which has been arranged on a five-year term, will be used to acquire and fully let the asset. With no early repayment charges, it provides the client with complete flexibility, removing the requirement to lock in for five years at fixed rate pricing, especially at a time when then SONIA benchmark was at its peak.

Arc & Co. expects residential PRS and build-to-rent to continue being a core focus among real estate lenders, as affordability concerns resulting from the cost-of-living crisis, encourage more people to rent. Developing a quality product, at an attractive price point is in high demand, with more BTL investors being pushed out of the market with rising interest rates.

Cameron Hayes, asset finance adviser at Arc & Co., said: “The fundamental strengths of the residential market remains an attractive focus for lenders. It is a sector that requires specialist understanding, in particular around valuations, with net initial yields still being attractive for investors who can capitalise on buying assets vacant at practical completion and stabilising income. The facility is an ideal solution, meeting the strategic aim for the client and avoiding the requirement to hedge, in an environment where interest rates are poised to reduce, given recent market uncertainty”.

The Arc & Co. Group is a specialist asset finance advisory company based in Mayfair, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO ARRANGES £5.65m SURREY RESI DEVELOPMENT FACILITY

Specialist debt advisor Arc & Co. has arranged a new £5.65 million development loan from West One to finance the completion of a 29-unit residential scheme in Surrey.

The facility enables construction work on the part-built residential scheme to be completed, and refinances a loan from a third party development lender. It was taken out at a loan-to-GDV of 65% over an 18-month term by a private client of Arc & Co.

The deal was finalised within a tight schedule, with agreement of terms just one month after the first enquiry. Due diligence was expedited by reassignment of previous valuation and project monitoring surveyor reports.

Tom Berry, asset finance advisor at Arc & Co., said: “The speed with which we were able to work with the client and West One to finalise this facility highlights the benefits of mutual trust between all parties. Utilising existing valuation and PMS reports helped to process the case quickly. Situations such as this – refinancing a part-completed development project – bring with them their own quirks to overcome, and as such it is hugely pleasing to have reached a solution that works for everyone. We look forward to working with both the client and West One on future projects.”

Alan Coleman, portfolio manager at West One said: “Being able to get this facility in place within 28 days of Tom sending me the enquiry and 22 days from the application being received is testament to the relationship which we have built with Arc & Co. over the years. Trust and confidence that a lender is able to get loans underwritten and completed quickly, regardless of complexity, is now more important than ever. We will continue to support our broker partners and their clients as we have supported Arc & Co. and this client.”

The Arc & Co. Group is a specialist asset finance advisory company based in St James’s, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO ARRANGES £3.5m CAMBRIDGE RESI DEVELOPMENT LOAN

Specialist debt advisor Arc & Co. has arranged a new £3.49 million development finance facility with Hampshire Trust Bank for the construction of three houses within the city by a private client.

The loan has been taken on a 24-month term at a loan-to-GDV ratio of 65% and an interest margin of 5%. The facility will fund the development of three houses, which each will have individual sales values of between £1.5 million and £2 million.

Tom Berry, asset finance advisor at Arc & Co., said: “The demand for high-quality housing in Cambridge makes this an attractive scheme for lenders, but it is still crucial to find a partnership that works for everyone. Hampshire Trust Bank is renowned for its understanding of projects such as this, and the client has a proven track record of delivery. We look forward to working with them both on future developments.”

Alex Upton, managing director, development & bridging finance at Hampshire Trust Bank, added: “Property lending requires everyone involved in the project to work together as a team to achieve the same goal, no matter how complex. Arc & Co continues to show dedication in ensuring that the requirements of lenders and developers are met, and that this can be replicated on future developments for great clients such as this.”

The Arc & Co. Group is a specialist asset finance advisory company based in St James’s, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO ARRANGES £6m ARBUTHNOT LATHAM MORTGAGE FOR UHNWI

Specialist debt advisor Arc & Co. has arranged a new £6 million mortgage from Arbuthnot Latham on behalf of an ultra high new worth (UHNW) individual, with the new loan agreed within just three weeks.

Arrangement of the interest-only mortgage, which has been taken out against the individual’s £10.5 million primary UK residence in North London, was expedited to meet a tight schedule, with Arbuthnot Latham able to utilise previously-conducted searches to underwrite the loan. It was priced at a margin of 2.4% over base rate for a five-year term.

Andrew Robinson, CEO of Arc & Co., said: “Completing a fully-regulated loan of this scale within just three weeks is almost unheard of, with the mortgage finalised over the sort of timescale more usually associated with bridging finance. It was great to work with Arbuthnot Latham, whose nimble approach allowed the facility to be agreed within such a tight schedule.”

Jay Chavda, regulated mortgage and lending advisor at Arbuthnot Latham, added: “Agreeing a mortgage to a tight deadline is entirely dependent on genuine understanding of the asset, the market and absolute trust between all parties. We have a longstanding relationship with both Arc & Co., which enabled the swift closing of the deal, and we look forward to working with them on future opportunities.

Tom Blackmore, senior private banker at Arbuthnot Latham, added: “We always work with clients to approve deals as quickly as possible. Thanks to our excellent working relationship with Arc & Co. and their speed in providing the information we needed, we were able to complete on the deal in just three weeks.”

The Arc & Co. Group is a specialist asset finance advisory company based in St James’s, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO ARRANGES £6.85m TOPLAND RESIDENTIAL BRIDGING LOAN

Specialist debt advisory Arc & Co. has arranged a new £6.85 million bringing loan with Topland Group for the refinancing of a portfolio of nine residential, units in Hull and the acquisition of a further 39 properties in the same building by a private client.

The loan has been arranged on a nine-month term, with low early repayment charges, at a new loan-to-value ratio of 64% and a pricing margin of 5.5%.

The bridging finance solution was reached following the pre-Christmas withdrawal from the market of a number of buy-to-let lenders due to temporary uncertainty. With the client looking to refinance nine units and acquire additional properties, the best approach was to do so through bridging finance for a short period before looking to access a more orthodox long-term facility when the lending market stabilises.

Recent uncertainty has seen buy-to-let lenders impose stricter stress testing and increased ICR covenants across the board, reducing the leverage traditional providers are happy to provide. It is anticipated that a period of certainty in the market will see those conditions relaxed slightly in the coming months.

Tom Savill, asset finance adviser at Arc & Co., said: “The changes in the buy-to-let lending market made this a challenging refinancing and acquisition process, but by working with the client we identified the best solution for this situation. Bridging finance – especially on the terms provided by Topland, with low early repayment charges – offered an approach that meant the client could achieve its aims while providing the flexibility to take advantage of more preferential long-term finance as and when the market allows.”

Anish Vora, structured finance manager at Topland Group, added: “We are delighted to provide another competitive funding solution to an existing client. Our structured finance team can fund across the capital stack and look forward to supporting real estate investors and developers in 2023. Thank you to Arc & Co., Knight Frank and Osborne Clarke for their support on this transaction.”

The Arc & Co. Group is a specialist asset finance advisory company based in Mayfair, London. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, leasing and mortgages.

ARC & CO STRENGTHENS TEAM WITH TWO HIRES

Edward Dickinson joins as private client advisor, Perry Beckett as advisor

Arc & Co. has further strengthened its market-leading asset finance advisory capabilities with two appointments to its team.

Edward Dickinson joins as a private client advisor, with extensive experience of property finance and mortgage advisory for high net worth individuals. In his new role, Edward will be working alongside CEO Andrew Robinson, chairman James Fleming and regional chairman Paul Davies.

Edward’s arrivals strengthens private client capabilities that are already unrivalled in the sector. James Fleming was formerly head of international banking at Coutts & Co., chief executive of Arbuthnot Latham and most recently chief executive of multi-family investment office Sandaire. Paul Davies has more than 40 years’ experience, including 15 years based in Singapore as vice chairman of Coutts, Southeast Asia.

In addition, Perry Beckett joins as an advisor, focused on commercial and development transactions. Perry arrives having graduated from Milan’s Università Bocconi with a BSc in international economics and finance, followed by a Masters in management and finance from IE Business School in Madrid.

Based in Mayfair, London, The Arc & Co. Group is a specialist asset finance advisory company. Its three divisions – real estate, marine and aviation – allow it to provide specialist advice across a range of financing solutions, including senior debt, equity, mortgages and leasing.

Andrew Robinson, CEO of Arc & Co., said: “We are always looking at ways to strengthen Arc & Co. and as such it is pleasing to welcome someone with the private client understanding and experience that Edward will bring to the role. Similarly, Perry’s arrival demonstrates our commitment to attracting the very best new talent, and we all look forward to mentoring him as his market expertise grows. This promises to be a hugely exciting year for Arc & Co.”

THE EXPECTED RETURN OF STABILITY

After a volatile period, 2023 brings the prospect of greater stability – and with it a development finance market that can act with increasing confidence.

Matthew Yassin

Director of specialist debt advisory

Predictions are always something of a hostage to fortune, especially in a sector as exposed to shifting realities as development finance. But as we look ahead to what 2023 has in store, there are reasons to be optimistic that a period of greater stability will give the market stronger foundations to work from.

The volatility of recent years has hit the development sector in three major ways. Firstly, the pandemic, and to a lesser extent Brexit, caused manifold supply chain issues, creating material shortages and increasing lead times. This then provoked huge rises in the prices of both material and labour, something that was stoked by the energy crisis. Finally, belated efforts to crush inflation have seen interest rates rise sharply, with further increases anticipated.

However, absent any new ‘black swan’ events, the pressures in these areas are starting to subside. A combination of receding energy prices and base effects should see inflation return to a far more manageable level as the year goes on. This is turn will impact on the trajectory of interest rates, which are now anticipated to peak at a lower level than previously feared. In parallel, supply chains are recovering from recent shocks, reducing lead times, increasing availability and having a further deflationary effect.

While the cost of money, materials and labour will settle above pre-pandemic levels, the equilibrium they will reach offers an opportunity for green shoots after a period of significant volatility. A more stable environment will encourage development and allow lenders to act with increasing confidence.

This new equilibrium will of course have some victims. Higher costs will put downward pressure on land prices, with landowners facing a period of realisation about new market values. Similarly, development viability will be hit and schemes at the margins will find it difficult to progress; many projects will face compressed GDV and equity injections if they are to continue. But the payoff will be a more realistic, streamlined market with the solid foundations to encourage transactions. As ever, it is the best assets that will most easily navigate the new normal.

In this environment, good finance and debt advisory will be key. Lenders should be applauded for the support they have given the market during recent uncertainty, but they can only do so much. As things settle, there will be greater clarity around what products are in the market, and accessing the right financing mix – be it equity, senior debt, development funding or bridging loans – will be key to success of any project.

Wishing you all a happy, prosperous – and stable – 2023.

This article first appeared in the February 2023 edition of Business Moneyfacts - you download the full magazine here.